A STUDY OF THE LABOUR MARKET IN SOUTH AFRICA

European Journal of Research in Social Sciences

Vol. 2 No. 4, 2014

ISSN 2056-5429

A STUDY OF THE LABOUR MARKET IN SOUTH AFRICA

Zeleke Worku

Tshwane University of Technology Business School

Pretoria, SOUTH AFRICA

ABSTRACT

This is a study of the labour market in South Africa. The study aims to highlight the

existing conditions of labour in South Africa as well as the impact of labour-related

conditions and legislation in South Africa on the South African economy. The South

African job market is characterized by inflexible labour laws, lack of technical and

artisan skills, and high levels of unemployment. Those unemployed are mostly unskilled

and often have low level of formal education and artisan skills that are required for

securing employment opportunities. The South African labour law seems to be restrictive

and inflexible in the eyes of potential employers. Although labour market policies that

were introduced after April 1994 have managed to change the structure of the South

African labour market, unemployment rates have not been reduced to date. The rate at

which the economy has grown since April 1994 has been significantly smaller than the

rate at which jobs had to be created in order to absorb the unemployed into the economy.

This paper investigates factors that affect the duration of employment and job mobility in

the South African labour market by using the South African Labour Force Survey data set

of 2007. The study shows that union membership and ownership of pension funds are

negatively associated with job mobility. The study has found that workers (cetaris

paribus) workers who belong to pension funds are, on average, twice as likely to stay on

their jobs. The results for union members are similar. The study shows that job mobility

is significantly influenced by age, race, level of skills training, level of household income

and province of residence. The results show that the Province of Mpumalanga was most

significantly affected by job mobility. The provinces that were least affected by job

mobility were the Western Cape, Gauteng and Limpopo in a decreasing order. The study

provides an exploratory analysis of the labour market in South Africa, and proposes

remedial actions to policy makers and planners.

Keywords: South Africa, Labour law, Unemployment, Skills, Job market, Probit

regression.

JEL classification: J21, J60

INTRODUCTION

Since April 1994, various studies have shown that the South African labour market is not

conducive for attracting foreign direct investment. With very high unemployment rates,

job tenure and mobility have not been the focus of many studies in South Africa. Instead

researchers have put much emphasis on patterns of segmentation of the labour market,

the relationship between unemployment and earnings and race differentials in labour

market outcomes (Heintz and Posel, 2008; Kingdon, G. and J. Knight, 2002, 2004, 2006;

Progressive Academic Publishing, UK

Page 106



European Journal of Research in Social Sciences

Vol. 2 No. 4, 2014

ISSN 2056-5429

Fassler et al, 2001; Maciej and Tyrowicz, 2009). Policies in South Africa have been

geared towards redressing the economic, social, cultural, political power and resources

disparity created by Apartheid1. This has resulted in more opportunities to non-Whites

although some of the research work mentioned above indicates that labour market

inequity still persists with a racial wage gap of 30%-55% (Maciej and Tyrowicz, 2009).

Research work that examined job tenure do suggest that in the US there has been some

decrease in tenure (albeit modest) amongst White males Blacks and young adults who

had previously had long tenure (Neumark et al, 1999). Similarly, the UK has seen some

fall in average male tenure (Gregg and Wadsworth, 1995 and 1998), especially amongst

the lower paid (Burgess and Rees, 1996). The classic study by Becker (1981) has shown

that there is an inverse relationship between job mobility and investment in job-specific

skills, which include both experience and education (Becker, 1981). The higher the job

tenure, the more workers specialize in their field of training the higher becomes their

earning potential in their job, and thus reduces the risk of job mobility. Thus if firmspecific skills are an important determinant of earnings, changing jobs may result in wage

losses. In addition, acquisitions of transferable skills determine the wage impact of

changing jobs. Empirical analysis related to job tenure and mobility is limited due to the

unavailability of data required for such type of analysis. Often available data set have

limited demographic information, household characteristics and job-related information

in addition to measures of individual tenure and reasons for mobility. Availability of

longitudinal data for such analyses would be ideal not only for assessing the validity of

the theoretical models but also in identifying the determinant of tenure and mobility and

potential causes and effects of socio-economic conditions.

The design of the study is descriptive and cross-sectional. The data sets used in the study

are obtained from Statistics South Africa. The study is based on a household survey

conducted by Statistics South Africa in an attempt to assess and evaluate socioeconomic

factors that are known to affect the labour market. The article is organised as follows.

Section 2 presents a review of the literature on job mobility. Section 3 describes the data

set and explains the variables used in the study. Section 4 provides a descriptive analysis

of the job market situation, job tenure and mobility in South Africa. Section 5 presents

the results; and Section 6 presents conclusions.

LITERATURE REVIEW AND CONCEPTUAL FRAMEWORK

Changes in the distribution of job tenure have been studied in the US by Newmark et al

(1999) and in the UK by Burgess and Rees (1996). Mumford and Smith (2002) did a

comparative study of Australia and the UK. All of these studies have shown that a

decrease in job tenure. Furthermore, these studies have shown that job tenure is shorter

among non-Whites and female workers. In this paper we propose to conduct an analysis

similar to the one conducted in Australia and the UK by using South African data. In

South Africa, jobs are less long lasting among Whites who had relatively very long

tenure as the White work force is aging and shrinking. In the process, many specialized

1

Post Apartheid reforms include affirmative action policies that were legislated in the form of various

Acts: Public Services Act, the Employment Equity Act, the Skills Development Act and the Skills

Development Levy Act

Progressive Academic Publishing, UK

Page 107



European Journal of Research in Social Sciences

Vol. 2 No. 4, 2014

ISSN 2056-5429

skills are being lost to the economy. In the past the Apartheid system created motivation

for White workers to stay longer on the job with job reservation for those who wished to

work immediately after matriculation with incentives such as on the job training and

greater social benefits. The African work force is relatively younger. The study

investigates the impact of demographic, human capital and job characteristics on job

tenure.

Descriptive statistics on job mobility in South Africa

Figure 1 shows the proportion of workers by the length of time in the current job from

2000 to 2008. The figure shows a reduction in job tenure over the period 2000-2008. The

proportion of people in the same job for 10-20 years has fallen from 22% in 2001 to 15%

in 2008. The proportion of people employed for 7 months to 2 years has moved in the

opposite direction. The most common length of tenure for most years remains 2-5 years

whereas 20 years and more is the least common period of tenure.

Figure 1: Proportion of employed by length of time in job

Source: Statistics South Africa (2008)

0-6 months

>2 years to 5 years

> 10 years to 20 years

Percent

7 months to 2 years

> 5 years to 10 years

> 20 years

25.0

20.0

15.0

10.0

5.0

0.0

2000

2001

2002

2003

2004

2005

2006

2007

2008

Years

Figures 2a and 2b present the average duration of tenure by population group and gender.

Whites have the highest length of tenure compared to the other population groups.

Africans have the shortest average length of tenure. However the lengths of tenure seem

on the decline for all population groups except for Whites. Figure 2b presents the gender

split. Females have the shorter tenure compared to males and compared to the total

average. A separate analysis of the job tenure by gender and population group also shows

White females having the highest average length of tenure compared to their other

counterparts and African females having consistently shorter tenure. This can be

Progressive Academic Publishing, UK

Page 108



European Journal of Research in Social Sciences

Vol. 2 No. 4, 2014

ISSN 2056-5429

explained by the type of jobs available to these women which are often unskilled and in

the informal sector.

Figure 2a: Average duration of employment by population group and gender

(a) Comparison of duration of employment by population group

Mean

duration

Af rican

Coloured

Indian

White

9.5

9

8.5

8

7.5

7

6.5

6

5.5

5

4.5

2000

2001

2002

2003

2004

2005

2006

2007

2008

Years

Source: Statistics South Africa (2008)

Figure 2b: Average duration of employment by gender

Male

Total

Mean

duration

Female

9.5

9

8.5

8

7.5

7

6.5

6

5.5

5

4.5

2000

2001 2002

2003 2004 2005

2006 2007

2008

Years

Source: Statistics South Africa (2008)

Progressive Academic Publishing, UK

Page 109



European Journal of Research in Social Sciences

Vol. 3 No. 1, 2015

ISSN 2056-5429

Figure 3 shows the job mobility pattern by age group. Job mobility decreases with age. Our

data is in line with this expectation. The youngest age group (16 to 17 years) has the smallest

proportion, followed by the oldest age group (50 years and older). The reason why the

percentage in the 16-17 age groups is low is because it is more likely that they just entered

the labour market and thus it is less likely that they have been employed in the same job for

more than a year. Old employees (50 years and older) are also less likely to change jobs as it

is more difficult for this age group to find new jobs. Besides, it is less likely that people

change jobs when they are approaching the end of their career. The highest mobility is

observed among those aged 25-34 followed by those aged 35-49. These age groups constitute

the bulk of the labour force in South Africa. These are people who may have settled in a

career, but would move from job-to-job to improve their earnings. Labour turnover is a big

concern in South Africa, especially in the public sector. Frequent occurrences of job openings

generate higher rates of job mobility.

Figure 3: Proportion of employed in the same job for the past 12 months by age group

16-17

18-24

35-49

50+

25-34

Percent

50.0

45.0

40.0

35.0

30.0

25.0

20.0

15.0

10.0

5.0

0.0

2000

2001

2002

2003

2004

Years

2005

2006

2007

2008

Source: Statistics South Africa (2008)

The level of education has an impact on job mobility. The literature suggests that the higher

educated workers are the most mobile workers. In South Africa, however, the majority of

mobile workers are those with some secondary education whereas the least mobile are those

with no education at all (Figure 4). Those who have some primary education are less mobile

than those who completed secondary education but more mobile than those who completed

primary education. The higher educated are less mobile compared to those who only

completed high school. Long tenure encourages firms to invest in the skills of their

employees.

Progressive Academic Publishing, UK

Page 110



 ................
................

In order to avoid copyright disputes, this page is only a partial summary.

Google Online Preview   Download